after all this [the captain] is still blameless??
I haven't said that the crew were 100% blameless. I think they were complacent, just like everyone else in the causal chain.
We'll never know whether they hand plotted the INS co-ords onto a topo chart. Most of the navigational notes were made to disappear in the coverup by the Company. I suspect that during the flight the only INS data they monitored was DTG and Xtrk. In their minds the datum line to which those parameters referred was straight down the middle of the Sound.
The altitude restrictions were there because the Airline was given approval to use crews who had no previous experience down to the ice, which went against the requirements of all the other operators USAF, USN,RNZAF who had much experience operating down there.
It was widely known, at all levels of management, that those flights regularly flew well below the nominal floor of 6,000'. As for sending captains down there with zero experience of Antarctica: it was diabolically dangerous. All three members of the crew had never been there before. For the CAA to have allowed such a reckless policy was unforgivable.
If this crew was on the ball, and they thought they were going down McMurdo Sound, why was it not noticed they were on the wrong side of Beaufort Island?
They quite certainly thought they were going down the Sound and they quite certainly thought the INS trackline was guiding them there. That much is certain. As for the reason why they did not recognise Beaufort island, I think it comes back to a lack of local knowledge and complacency. They saw only what they expected to see and did not see what they did not expected. A well known phenomenon in Human Factors (nowadays).
As for why the local guide, Mulgrew did not recognise the island: he wasn't on the flight deck at the time. He was making his way through the crowded pax cabin at the time, no doubt chatting to people along the way and probably wasn't looking out of the Stbd windows. He was about as agile on 'his' feet as Douglas Bader was, and for the same reason.